| Welcome to the October issue of the Select Wealth Management Dashboard Newsletter. What a great weekend of sport! Amazing results for the Black Caps, White Ferns, Americas Cup, Silver Ferns, Auckland FC, Wellington Lions, and Liam Lawson! A truly remarkable time to be a New Zealand sports fan like myself. Just need my beloved Wellington Phoenix to kick on now!!! GO ALL YOU GOOD THINGS!!!!
2024 is a historic year for Elections. More than 60 countries are heading to the ballot boxes this year, with about 49% of the world's population due to vote - quite remarkable. The election that most people are watching with interest is the American election. Election day is 5 November, so by this time next month we should know who the next American president is. If the polls are to be believed, it's too close to call at this stage with Kamala Harris and Donald Trump neck and neck. It would take a brave person to bet with any confidence what the outcome will be. If I had a dollar for every time somebody asked me what the impact of the American election will be on the markets this year, I'd be buying everyone a drink at the pub tonight! I guess it's a natural question to ask. I can vividly remember the 2016 Elections when Trump won the first time. I was at the Rydges Hotel in Wellington at an all day presentation from a panel of investment experts (fund managers, researchers, economists). It was co-incidental that the presentation was on the same day as the election results - it wasn't meant to be a day dedicated to the election. At the start of the day, there was a single television in the background with CNN on following the results. Nobody thought for a moment that Trump was even going to be in the contest - let alone win. But as the day wore on, the results came in and it became apparent that it was going to be close. A second television was turned on, following the markets around the world. It got closer. A third television, then a fourth. By 3pm, all the presenters had given up on the idea of delivering their presentations, and everyone was glued to the (now dozen or so) telly's watching the election results and the markets. By the time they announced Trump as the winner, there was absolute disbelief in the room. Markets had fallen 5% on the day, and all the talk in the room was conjecture about what the implications of this outcome were. It's fair to say that there was a lot of pessimism and fear. The unexpected and unknown tends to evoke these emotions. But guess what. A year after the result, the American share market had risen by 24%. This is a stark reminder that when you invest in the share markets, you are investing in companies - not political parties. And companies strive to do only 1 thing - serve their customers well enough to ensure that they can remain in business and make a profit, irrespective of which colour government is in power. Sure, election results can influence a single company's fortune. For example, a Trump led Republican government will most likely loosen regulations in the financial sector, so financials (such as banks) would benefit from this. Similarly, a Harris led Democrat government would place extra scrutiny on the energy sector and incentivise alternative energy, so old school energy companies (mines, oil, etc.) will struggle in this environment. But these examples are the exception, not the rule. Most companies simply continue their business, and on balance the collective share market marches on. As a consumer, you still watch Netflix, use Microsoft, pay your power bill, use your Estee Lauder products, drink your favourite Chardonnay, brush your teeth with Colgate, (I could go on forever...). So these companies remain in business and are largely unaffected. I love this visual which Dimensional Asset Management have put together. It plots the return of the S&P500 (the American share market) against the various Presidents since 1926 (red being Republican governments, blue Democratic). The 2 key observations are:
Click here to view full size image
So if you have been concerned about the elections and what effect this is going to have on your portfolio, hopefully this newsletter has helped ease your concern a bit. The fact is that all this short term “noise” will have very little impact on your long term financial plan, so try not dedicate any more energy to it that it deserves. Rather, sit back and enjoy the show - it should be a stonker! The past 30 days have been very strong for markets. Most major share markets are up between 1% and 5%, with Hong Kong's Hang Seng up a massive 13.7% (fuelled by the Chinese Government pumping stimulus into their financial system). Currencies are mixed, and mortgage rates and term deposit rates have declined sharply after the Reserve Bank of New Zealand cut the Official Cash Rate by 0.50% on 9 October. This will be very welcome relief for mortgage holders. According to www.propertyvalue.co.nz house prices have remained unchanged over the past month. However, according to the latest numbers from Trade Me Property, the average asking price for properties in Auckland dropped to $986,750 in August this year - down 1.3% from July. The online realtor said it was the first time the figure had sat at less than $1 million since September 2020. Here are the numbers for the past 30 days: |
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In terms of your Select Wealth Management portfolio, the September quarterly performance reports are now available on the portal (if you receive yours by mail it'll will be working its way through the mail system as we speak). It was a strong quarter of performance, helped by falling interest rates both here and offshore. The listed property sector was the best performing sector, with the Dexus AREIT Fund and OneAnswer International Property Fund delivering particularly good results. We remain very comfortable with our current fund managers, and I foresee no significant changes in the foreseeable future. Finally, a quick update on our Giving Back program. We have a couple of months left to raise money for Life Flight. We've had a bit of a slow campaign, and have only managed to raise $980 so far, but hopefully we can come home with a canter and reach our goal of $2,500. As always, thank you so much for the introduction to your friends and family to allow us to continue this program. We really appreciate it! Feel free to visit https://mifinancialplanning.co.nz/giving-back.html if you want to keep track of the Giving Back program. That's all for now. Chat again soon Warm regards Dave and the team at Makowem & Isaacs Financial Planning dave@mifinancialplanning.co.nz |
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This newsletter is intended for general distribution and does not constitute personal financial advice.